Research

In its fifth consecutive meeting, the Federal Reserve has maintained the federal funds rate between 5.25% and 5.50% for the first quarter of 2024, signaling that the rate may have peaked this cycle. Projections from the Fed’s March FOMC meeting suggest a possibility of 75 basis points reduction in 2024, contingent on economic data aligning with their 2% inflation target. Concurrently, HSA deposit rates have increased slightly since 2021, with average rates at 0.43% for a $1,000 balance and 0.54% for a $10,000 balance as of March 31st, 2024, indicating a gradual upward trend influenced by tiered rate schedules.

Devenir released the results of its 27th semi-annual Health Savings Account (HSA) survey and resulting research report. Devenir found that there is about $123 billion saved in over 37 million HSAs at the end of 2023.

Findings from the 2023 Year-End Devenir HSA Research Report containing Health Savings Account (HSA) market statistics and insights as of December 31st, 2023.

The rapid rise in the federal funds rate over the course of 2022 and 2023 has resulted in continued increases in the average rate paid on HSA deposit balances. As of December 31st, 2023, HSA providers are paying an average rate of 0.42% at the $1,000 balance threshold, an increase of 8 basis points from September 2023.

In the latest financial update, we explore the intriguing upward trend in HSA deposit rates that have paralleled recent hikes in the federal funds rate. As the Federal Reserve strategizes potential additional rate hikes, we notice a consistent climb in HSA rates across different balance thresholds.